I convert the .MTS files using Free HD Video Converter for Windows and Moyea MTS/M2TS Converter for Mac ($29). I preserve the native high definition resolution (1920 x 1080) of the videos and convert them to WMV (on Windows) or MP4 (on Mac OS X) using a video bitrate of about 7,000-8,000kbps, and an audio bitrate of 256-320kbps, 48khz sampling rate (WMA or AAC codec). I figure that this is good enough quality to then backup the videos onto a data DVD for long-term archival purposes. Plus, I can usually fit about one month of HD video onto a single DVD disc. Both Free HD Video Converter and Moyea MTS/M2TS Converter have presets to easily convert HD video if you don't want to mess with the technical details of the conversion.
When it comes to actually creating a video DVD that we can use to casually playback the videos, I use Windows Live Movie Maker and Windows DVD Maker on Windows 7 and iDVD on Mac OS X (iDVD 7.0.4, iLife '08). I don't need a fancy menu, I just want a simple DVD that will playback the videos automatically. Windows DVD Maker prefers the WMV video format which I create using the Free HD Video Converter. In iDVD, to create an autoplay DVD, follow these instructions.
|Unexpected results in iDVD|
For now, to make a simple autoplay DVD from the HD video files from my Canon HF200, I find myself going back to Windows 7 and using Windows Live Movie Maker, which is just drop-dead simple. Hopefully, more video editing and DVD authoring programs will support the .MTS format in the future, making the conversion step unnecessary. Windows Live Movie Maker actually does support the .MTS format, but editing full HD video is terribly slow and frustrating. In the meantime, these are the workarounds that have worked best for me. If you have found a better way, please comment!